Latam gas demand drop weighs on LNG imports from United States
A sharp drop in Latin American gas demand amid the coronavirus crisis this year reduced imports of U.S. liquefied natural gas but paved the way for supplies from alternative sources, analysts said.
Latin American LNG imports this year have dropped to 6.7 million tonnes, down almost 38% from a year ago, with the region slashing supplies from the United States by 30% to 2.9 million tonnes, Refinitiv data showed.
No Latin American country made the top 10 destinations for U.S. LNG in 2020. In previous years, countries from the region were among top importers of U.S. cargoes.
“A strong drop in LNG imports into South America this year is caused by the coronavirus and high hydro production that have reduced demand in power and transport sectors,” said Ieda Gomes, senior visiting research fellow at the Oxford Institute for Energy Studies.
Despite the drop, the United States has remained the biggest LNG supplier to Latin America, followed by Trinidad, which has exported 2.16 million tonnes this year, a 40% drop year-on-year.
A severe gas glut in Asia and Europe paved the way for cargoes to go to Latin America as sellers look to avoid causing further oversupply in key gas markets.
After Argentina received no cargoes from Qatar last year, six cargoes have gone to the South American country and four more are on the way, according to Refinitiv.
There has been a small uptick in deliveries from Equatorial Guinea and Indonesia as well, the data showed.
“From January to May 2020, the U.S has consistently supplied Latin America with at least 70% of their monthly LNG requirements,” Rebecca Chia, analyst with data intelligence firm Kpler, said.
“This figure dropped to only 36% in June, where alternative sources of LNG were seen streaming in from Equatorial Guinea, Qatar, Australia, Indonesia, and even a reload cargo from France.”
Source: Reuters (Reporting by Ekaterina Kravtsova in London, Jessica Jaganathan in Singapore and Scott DiSavino in New York Editing by Matthew Lewis)